Withholding allowance: The maximum amount of money you can earn and still have nothing withheld from your paycheck. Depending on your filing status, the number of allowances you claim will determine how much of your salary is subject to withholding for federal income tax purposes. With the proper number of allowances claimed, you may be able to reduce or eliminate withholding all together. Taking advantage of this benefit requires careful planning and diligent tracking of information, so make sure you consult with a qualified tax professional before making any changes to your withholding allowances.